Holiday financial protection in disarray

Travel consumer protection is crumbling and even the Civil Aviation Authority fears only a major company failure will force ministers to act.

CAA consumer protection group director Richard Jackson issued the warning at a conference of travel lawyers last week. “The ATOL scheme will be financially unsustainable sooner rather than later,” he said. “Consumer protection is a mess.”

He described tour operator plans to ditch ATOL bonding in favour of cheaper alternatives as “perfectly reasonable” and bemoaned the lack of Government interest. “A big failure would help put the issue in front of ministers. Ministerial embarrassment is what produced the ATOL system 30 years ago [after Court Line’s collapse].”

TUI has threatened to drop its ATOL this autumn and Thomas Cook has signalled a willingness to do the same.

The move would shift the balance between the 20 million UK travellers expected to fly on bonded holidays this year and the 11.2 million the CAA predicts will take unprotected ‘DIY breaks’, making this summer possibly the last when a majority fly abroad on ATOL-protected packages.

ABTA head of legal services Simon Bunce said: “Consumers seem willing to forego protection. Even ABTA travel agents seem happy selling non-bonded holidays. We’ll see more operators break out of the scheme.” ABTA marked a significant shift in its consumer message on financial protection in leaflets sent to travel agents last week.

“Our message is most of what is sold by ABTA members will be protected and you can discuss it with your agent or operator,” said Bunce. “It was never true that everything members sold was covered.”

He acknowledged the possibility of a high-profile failure: “Are we waving goodbye to our reputation with consumers? It’s a risk.”

Sunvil Holidays managing director Noel Josephides, director of the Association of Independent Tour Operators, believes the trade’s reputation is at stake. He fears consumers will desert small travel firms when they wake up to the risks. “The public will migrate to organisations with household names such as Thomson, which they know are unlikely to fail,” he said.